Friday, March 05, 2010

A model for development

OVER the past two to three years, I have been involved with two organisations that one can deem successes in their own right. The first is the Jamaica College (JC) School Board and Foundation, led quite ably by the Hon R Danny Williams, and the second a board I have chaired since 2007, and which was recently reported on, Jamaica Ultimate Tyre Company Limited (JUTCL).

In the case of JC, I have had the privilege of working with a group that includes old boys (or they would prefer the term 'past students' to hide their chronological ages) and staff who have been nothing but focused on the development of the institution. At the helm of the operations has been a thoroughly devoted principal, Mr Ruel Reid.

High levels of indiscipline
When the Danny Williams board took over at JC, we were faced with high indiscipline and poor academic performance. Today, I am proud to have played an active role in the transformation of JC into one of the more sought after schools and a place where I would recommend that any parent send their child based on the current development plans. Of course there are problems, but this is mainly as a result of the societal influences. JC is truly living up to its motto, Fervet Opus in Campis: Work is burning in the fields.

In the case of JUTCL, when the three-man board took over the company in 2007, we were making a loss of approximately J$1 million per month. Today, through very strategic policy and operational decisions, we are making a profit of some J$1 million a month. Other decisions are also being taken by the board and management to improve on that profitability in short order. One thing we are very proud of is that we do not get any subsidy from the Government and are current with all our taxes and regulatory requirements. A source of pride for me, also, is that we hold board meetings every six weeks, which averages two hours per meeting, and we restrict refreshments to sandwiches.

I think that both cases hold an invaluable lesson for Jamaica's own development, and are consistent with the view for development I referred to in my book. The path to development is conceptually the same for any institution and despite their differences, the organisations mentioned above both took conceptually the same approach to development.

In both, there was some amount of inefficiency and indiscipline to deal with. The first task in both cases was to carefully assess what the challenges were, and specifically put in place actions that would address those specific problems. In both cases also, the leadership of the organisation was the first thing that we looked at, as this is the most critical part of any transformation.

Similarly for Jamaica, my own view is that the main problem we face is one of the social arrangements and the respect of fundamental human rights. I also believe that Dwight Nelson is suited for the job of security minister, given what I know of his focus, and also the changes I have seen taking place in the police force.

Once the leadership was determined to succeed at both organisations, the next task was to ensure that the supervisory level was in place, to support the policies of the board and the operational objectives of the CEOs. In the case of JC, the principal, with the support of the board, made sure that the teaching staff was disciplined and efficient. This is important as many schools seek to deal with their problems by disciplining the students and ignoring the indiscipline of the teachers: This is a receipe for failure. The same thing was done for the JUTCL, ensuring that the CEO had the support needed to put the action plan in place.

Ministers responsible for policy
Similarly, as a public we must understand that ministers are responsible for policy direction but must ensure that the operational leadership is efficient and focused on the policy objectives, and they must have the latitude to ensure this or else they will ultimately fail. In my case (JUTCL), I continue to work with a minister (Mike Henry) who is very focused on profitability, efficiency, and service and who receives support from the Ministry.

The next task was to set specific operational goals and define the results we wanted to achieve, and by when. In the case of JC, the board and management designated targets for funding, academic, sporting, and development objectives. Timelines were placed on these, and three years later, I can say that most of these targets were achieved. In the case of JUTCL, we recognised that the pressures faced by JUTC would weigh us down if we continued to have them as our main customer, and so took a strategic decision to ensure within one to two years ensure that most of our business came from commercial customers, which we achieved in the timeline set.

For Jamaica, we need to ensure that the macroeconomic programme that we set out is achieved. There can be no wavering, and the risks must be carefully analysed and managed along the way. The biggest challenge the fiscal accounts continue to face is the revenue side, and this can only face further challenges if there is any attempt to raise new taxes. This is supported by the fact that the January 2010 revenue variance from budget is the largest for the fiscal year, even with the December 2009 tax package. The policy direction is correct, but the risks need to be carefully managed.

One very important operational activity was that we examined every single decision as a stand-alone. No decision was taken just based on the fact that we had excess in the system and therefore could afford to do it. It was measured against the objective, and if it did not add any value it was dropped. Certainly in the case of JUTCL, where the objective was profitability and provision of the best retread tyre, every decision whether to replace or upgrade machinery was supported by a cost-benefit analysis. If it was profitable then we would start the process. If not, then it was dropped until it could be proven so.

Of course, at any time an organisation is subject to risks and external forces, and the fortunes can change. What we must do is ensure that we manage the risks that we can control and those we can't, then we have to hope for the best. If, for example, energy costs go through the roof, then the operations of the JUTCL would be highly compromised.

Most important, though was the commitment of the personnel at the organisation. In the case of JC, the support of staff, students and old boys was critical to the success they see today. In the case of JUTC, the staff played an invaluable role. In 2008, when we recognised that the recession would affect us, and we were still making a small loss at the time, we went to the staff and asked them to produce the same amount of work in four days that they did in five. So we closed the plant on Fridays, to reduce overhead costs. We could not have done it without them and so the buy-in is extremely important.

This is the final point I want to make: if Jamaica is to move forward, then the buy-in from all citizens, not simply JLP or PNP, is important. Again I say that this is one ship, and both ends will go down or rise together. So everything must be done to ensure that all share in the vision for development, and not only those of us who are involved in the 2030 objective. The best way to do so is to ensure that the Jamaican citizen is at the centre of any developmental objective for the country.

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